Apples and Obamas—Tips on Managing a C-level Transition

Vault CEO Erik Sorenson recently wrote on this blog about some of the executive-level upheavals going on around us, and offered some suggestions for others to help avoid losing their spot in the hot seat. Turnover at the top, however, presents a unique opportunity and set of challenges for the new leader to deal with, and managing the transition is the first step to ensuring success in any executive role.Fortunately, there's one fairly high-profile—not to mention very public—transition going on right under our noses, with the new guy and his team set to finally take the reins on Tuesday. Surely, then, there must be something that new and prospective CEO's can learn from the Obama transition?

Be careful with that new broom…

While most corporate transitions aren't nearly as dramatic as a change of government (Satyam's current problems notwithstanding), there is nevertheless a temptation for the new leader to surround themselves with their own tried and tested advisors. That's hardly surprising in cases where business turnaround is expected, but at a profitable, well-run company any incoming exec may want to think twice about ousting people who know their jobs and their industry inside out. Such "legacy players" can be extremely important when it comes to insuring an orderly transition. And, as President Elect Obama has discovered, they don't just come in handy for continuing the work begun by a predecessor. The decision to keep Robert Gates on as Defense Secretary shows the importance of retaining a key employee to help ensure that those working under you aren't working against you out of spite. Whether it works or not—or is enough—is a question for another day.

…but don't be afraid to use it

Still, there's usually a reason for a change of CEO, and no new leader wants to come in and continue doing things exactly the way they always have been. To that end, getting rid of legacy players, or at least shifting them around a bit is in many ways an essential component of the new CEO's job. With that in mind, it helps to bring people with you that you can trust—even if they're not necessarily people you agree with. Obama's stated intention of creating a "cabinet of rivals" underlines the value in a CEO not surrounding themselves with people who tell them what they want to hear, or who are afraid to express an opinion that may differ from the boss's. That approach has been one of the hallmarks of the Obama transition thus far, with former adversary Hillary Clinton brought into the fold, along with several other players from the previous Clinton administrations (most notably Rahm Emanuel).

Do your homework

It goes almost without saying that you want to hire people who know their industry, and are experts in their field, but at the top levels of corporations and governments, is that really enough? As Bill Richardson and Tim Geithner have recently proved, there's an inherent risk in taking what a candidate tells you at face value, meaning the higher an employee goes, the more need there is for thorough vetting, and doing your own digging is paramount. Whether that involves Googling a candidate, hiring an independent specialist to check into them, or just hitting your network of contacts to get the full scoop depends on how much information you feel you need about someone before trusting them to represent you and your new employers.

Have a plan

The hierarchy for succession to the Presidency is a fairly well-known and well-established one. Should President Obama for any reason be unable to carry out his duties, VP Joe Biden takes over. Should he be unable, the role passes to Speaker of the House Pelosi, and so on down a well-established chain of command. The current difficulties at Apple, however, show the kind of unease that can emerge among investors when the boss has to leave with no clear line of succession in place. So even though it might be your first week on the job, it's never too early to start thinking about who's going to fill your shoes when you go. After all, unlike the President—who more or less knows exactly how long he has until he needs to dust off the resume—the average CEO never knows for sure, especially in the current economy.

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